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May 4 2017 by

#StartupsEverywhere

Engine, the non-profit organization that supports technology startups through economic research, policy analysis, and advocacy, has been producing profiles of startup communities throughout the United States on its blog.

The series, #StartupsEverywhere, launched in January and has produced 14 profiles so far, including Baltimore, Cedar Rapids, Connecticut, Honolulu, Jackson (TN), Kansas City, Madison, Memphis, Phoenix, Raleigh-Durham, Santa Barbara, Tallahassee, Tampa, and Tulsa.

#StartupsEverywhere is designed to celebrate these diverse, vibrant entrepreneurial ecosystems that are growing across the U.S. The project will showcase exciting developments in a variety of rising communities through weekly interviews with startup ecosystem leaders. The profiles will look at issues ranging from the challenges faced by these communities to the unique qualities that set them apart from traditional technology hubs.

The folks at Engine tell me the series will continue indefinitely, and they’re always on the lookout for cities to profile and interesting stories to tell. So, if you’d like to get involved, you can reach out to Emma Peck.

You can follow the series directly with this link. I encourage you to check it out.

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Apr 27 2017 by

Chicago’s Startup Ecosystem: Some Reading

I’m going to Chicago tomorrow to attend the wedding of an old friend over the weekend. Chicago has always been a special place for me—I lived there for a few years after college and received a first-rate education on the city’s south side. Chicago is awesome.

A lot has changed in the city since then, including the development of a booming tech and startup scene. Some of this I’ve learned about through conversations with active participants in the startup community there, and some has been through a series of research that has been published in the last few months.

As such, I’ll use this opportunity to share some of these items with readers who might be interested. The collection of readings—which span academic working papers, analytical blog posts, and business case studies—are all great. They are informative, well-written, and resourceful. And please, if you know of others, add them to this thread in the comments section. Enjoy.

. . .

The Mattermark Series, (2016). Last December, Mattermark published a four-part series of research commentaries by Chicago-based tech journalist Jason Rowley. The series documents the historical roots of the Chicago startup and tech ecosystem, it’s development into what it has become today, and an outlook on its future. I found the series to be well-researched and honest—you’re not going to get an overly-sunny, hometown sales pitch here, but a fair assessment and a call to action.

Rising From the Ashes: The Emergence of Chicago’s Entrepreneurial Ecosystem, (2017). This Harvard Business School case was written by Lynda Applegate—along with co-authors Alexander Meyer and Talia Varley—who has co-authored some great HBS case studies on startups and ecosystems before, including one on the Startup Chile program. The title is motivated by the Great Chicago Fire of 1871, as is what many would describe as the heart of the Chicago startup ecosystem—the innovation hub and incubator 1871. The content is comprehensive and accessible. It captures the breadth of key issues about startup ecosystems using Chicago as an example (which is why I used it last semester for the final course project for a class I teach on startup cities).

The Campus as Entrepreneurial Ecosystem: The University of Chicago, (2017). This academic working paper, published just last month by entrepreneurship professor Zoltan Acs and his co-author David Miller, contains a lengthy description and assessment of the startup ecosystem at the University of Chicago specifically, and how it ties into the local and global startup communities more broadly. The first half of the paper presents a framework for thinking about university-based startup ecosystems generally—using the metaphor of American frontierism, and its reliance available assets, liberty, and diversity—which readers who are purely interested in the UChicago case study can easily skip over. I found that part thought provoking, but those who want to dive right into the case will find that portion of the paper self-contained.

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Apr 19 2017 by

Startup Communities and Saturday Morning Coffee

A recent article in 5280 Magazine caught my attention. It profiled the economic vitality of the Boulder-Denver region, dubbing it “The Most Exciting and Innovative Tech Hub in the Country.” While I expect every local publication to champion its own hometown, this one happens to be on stronger footing than most others. You see, at least in terms of innovation and startup activity, Boulder is unique among its peers.

The article—which is excellent by the way—couldn’t have come at a better time for me personally. A few days ago, I moved myself and my family to Boulder to work on a book about startup communities. Not only did I come here to work closely with my friend and co-author Brad Feld, I also wanted to experience first-hand what makes this place so special. I came here to learn… and to contribute.

Boulder may be small, but it is mighty. My own research demonstrates that Boulder is a major outlier among American cities when taking into account population size: it has the highest density of technology startups in the country (by a long shot) and it has the second highest concentration of venture capital dollars invested behind the San Francisco-Silicon Valley region. This research is a few years old, but more recent figures confirm the trend.

As the chart above shows, when adjusting for city population size, Boulder has more than 10 times the average for the entire United States—second only to San Francisco-Silicon Valley, which has about 20 times the US overall. Boulder’s venture capital investment per resident far exceeds that of Boston-Cambridge, New York City, and Los Angeles.

Critics may suggest that per-capita figures are misleading, and that what really matters is critical mass. It is true that Boulder is small—with approximately 108,000 residents in the city itself, and about 322,000 in the broader metropolitan area, it is most similar in size to South Bend and Green Bay. And, in absolute terms, Boulder accounted for just 1.2 percent of total venture capital invested in the United States between 2009-2016. By comparison, Denver’s contribution was 1.6 percent and San Francisco-Silicon Valley’s was 40 percent.

But, Boulder’s undeniable successes dispel those critiques. Google and Twitter acquired local startups SketchUp and Gnip, and both maintain sizable (and growing) outposts here. Biotech firms Clovis Oncology and Nivalis Therapeutics each raised north of $100M in capital on their way to public listings on the NASDAQ. SendGrid was founded in Boulder in 2009, and although the company moved headquarters to Denver last year, most of its growth—the company employs around 400 people today—occurred in Boulder. And that’s just the tip of the iceberg.

So, what makes Boulder so special?

To start with, Boulder has some obvious natural advantages. It is a beautiful place to live, has copious amounts of sunshine, and a vibe that attracts people who are active, mobile, and educated. It has a major research university and hosts an array of public and private R&D facilities. Historically, Boulder has boasted flagship companies in data storage, pharmaceuticals, and natural foods, which spawned a number of startups in these areas.

However, many places have some or all of those resources, yet lag behind Boulder. In fact, research has shown that the average relationship (correlation) between these factors and local high-tech or high-growth startup activity is tenuous—cities that are startup hubs have most or all of these qualities, but not all cities that have most or all of these qualities are startup hubs. In other words, these “assets,” as I will call them, are necessary but not sufficient conditions for a dynamic startup ecosystem.

If it’s not hard assets that make the difference, then what does?

In her seminal work, Regional Advantage: Culture and Competition in Silicon Valley and Route 128, AnnaLee Saxenian demonstrated that the differentiating factor for Silicon Valley’s success was culture. Silicon Valley firms and institutions had porous boundaries, engineers and entrepreneurs cooperated in a system that valued technological progress over firm identity, and the region embodied a flat, network-based approach to innovation and “collaborative competition.” It wasn’t just the quantity nor the quality of individual actors in Silicon Valley that decided its fate—though both were necessary—but instead, it was the way in which they engaged with each other and with the system as a whole that made the difference.

Brad’s 2012 book Startup Communities: Building an Entrepreneurial Ecosystem in Your City, which this blog is largely a dedication to, is also fundamentally about culture and approach. It describes the attitude of the startup community in Boulder, drawing broader lessons for other regions to learn from. Among these are inclusiveness, playing positive-sum games, being mentorship driven, having porous boundaries, and giving before you get, along with others.

“What we discovered is a community [in Boulder and Denver] full of ambitious leaders who value cooperation” ~ 5280 Magazine

I’m only a few of days in, but I can already see something is special here. Boulder may look like a small city (~108K residents), and it may act like a small city (people are very friendly and open), but it doesn’t feel like a small city—at least not like the small cities I have known. Boulder is an unmistakably vibrant place, with an army of smart, enthusiastic people doing interesting things, and having fun along the way.

Ok, but what’s this got to do with coffee?

After two days of driving to get here—some of it through poor, mountainous weather—my dog and I were a little on edge. To make matters worse, we had a bizarre run-in with a giant, angry cat upon arrival that left her quite shaken. Frankie is a very sensitive soul, and this series of events—the travel, the new environment, and the cat from hell—left her even more clingy to me than ever.

Saturday morning rolled around and I needed my coffee. The house I’m renting was empty of rations, so I ventured out to the local java establishment. Dogs are very much welcomed outside, as could easily be seen by the array of them on the sidewalk (one local said to me, “Welcome to the West Pearl Dog Park!”), but forbidden from going inside. Fair enough. But Frankie wasn’t having it. She was not ok with any sort of separation between us. How the hell was I going to get my coffee without further traumatizing her?

That’s when the community kicked in. Two tables of complete strangers sprung into action, offering to care for my distressed dog, putting her at ease so that I could grab a cup of joe. As these, and other valiant efforts failed, one kind neighbor emerged from inside, extending to me a hot cup of coffee, a sugar-laden pastry, and a warm smile. A chair was gently pushed out from one of the tables and Frankie and I were invited to join in Saturday morning conversation, as if we had done so many times before.

What became immediately obvious to me is that these people—a diverse bunch—know each other very well. They all live in the immediate neighborhood, had done so for many years, and they interacted frequently at their favorite neighborhood meetup. And yet, here they were, immediately welcoming a stranger into their world, sharing ideas and insights about the place they call home.

It was all there right in front of me, what I had come to learn about, contribute to, and be a part of—a community of established “leaders”, who were inclusive, cooperative, playing a positive sum game, giving before they received, and mentoring a newcomer. It was what I had heard about, but was experiencing first-hand in a totally unexpected way—which in my experience, is how some of the deepest learnings occur.

Things unfolded as they needed to, and I’m looking forward to the adventure ahead. I do it with eyes open, ready for my opportunity to pay it forward… as one does in a community.

Since I’m new, I’d love to get in touch. If you’re local and want to meetup, you can find me on Twitter or via email. Thanks in advance for the warm welcome. And, let me know how I can be of help.

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Dec 21 2012 by

The Atlanta Tech Village – A New Hub For Atlanta Startups.

Guest Post By: Kyle PorterSalesLoft – (Founder & CEO)

In a business city known for it’s fortune 500 giants, the Atlanta startup community took a massive step forward today.

Atlanta Entrepreneur David Cummings has purchased Ivy Place, a 100,000 square foot building in the heart of Atlanta’s Buckhead district for $12.5 Million. He’s changed the name to the “Atlanta Tech Village”, and is designing the building specifically to enhance the Atlanta startup ecosystem.

The village will be a center point for the Atlanta startup community and will provide flexible space for startups to grow from one founder to dozens of employees. It’s expected to house up to 75 companies, and will include a meeting space for up to 150 people.

From the website, the Village’s plan is to “bring the community together, promote serendipitous interactions, and be a powerful tool for recruiting the best talent. ATV is designed as a campus for all types of people doing innovative things.”

“Too much money is wasted by startups on ill-fitting long term leases and heavy customization” Says Cummings. “The Tech Village will alleviate these pains for startups”

David is committed to investing another $5 million in the building for renovations that should be finished by Summer 2013. Think rooftop decks, patio build outs, large sliding glass partitions, open areas, exposed ceilings and more. It’s going to be the only building of it’s kind in Atlanta that caters directly to the startup community, with pricing and terms unique to the needs of startups.

The Cambridge Innovation Center in Boston was an inspiration in the creation of the Village.

The New Atlanta Tech Village

Atlanta has always been known for it’s big business. Companies headquartered here are some of the world’s largest and most influential (Coca-Cola, UPS, Home Depot, Delta, etc), but Atlanta has been overlooked a national scale as a startup community. With the building of the Tech Village and other major successes this year (Vitrue, BLiNQ Media, Pardot, Cloud Sherpas), Atlanta is beginning to change that stigma.

Led by a new breed of passionate, “give-first” entrepreneurs, the city of Atlanta is seeing momentum like never before. Entrepreneurs are taking risks, companies are exiting, and investment is happening. The Atlanta technology community is thriving and ATV is a integral part of the momentum.

Kyle Porter, CEO of SalesLoft 

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Aug 21 2012 by

Why Do Startups Even Need A Board

Lets face it. As founders and entrepreneurs, you have much to do – getting to your minimum viable product, developing customer interaction, hiring team members (when you have no cash) and managing the accounts/books (when you have some cash).  Sooner or later, you have a board of directors, three to five (or even seven) Type A personalities who seek your attention and at times will tell you what to do. What a pain in the rear! Or are they?

A Board of Directors is formed as soon as you raise your first outside round – if its a smaller amount from angels, crowd-funding or F&F (Family and friends, or in some cases fools and friends), you can get away without forming a board. But we strongly recommend establishing an objective outside group that would:

(a)  understand your startup’s milestones

(b)  help you get to your milestones faster

(c)  hold you accountable if you don’t get there.

Prior to funding, this could be a mentor, or a smaller group which acts like your training wheels for a formal board setting. We will get into some of these “corporate governance” nuances in greater detail in the following blogs.

Lets take a step back and understand how humans behave.

1)  We believe our own hubris much too often: As an entrepreneur, you are the one to change the world. But when do you know it’s hubris versus progress? More often, entrepreneurs are strong headed and do not take ‘no’ for an answer. But this very attribute can become a detriment when the markets change, competition becomes stronger, or regulatory forces can kill your startup. An outside individual is  not as vested – they can see the forest and are not caught up in the minutiae. Take the example of a researcher who invented a cool technology – having received rave reviews in business magazines and featured in the “Best of…” columns, this founder felt like there was a billion dollar opportunity here. After two years of playing around and having burned over one million dollars, the researcher still believes there is a billion dollar market. Product development status is stagnant, markets have moved on, competition has invented products that are 10X cheaper and in all practical realms, the opportunity is over. But this is the founder’s baby and he still continue to try and make it work, when every indication says, its done.

A good board member, who is honest and bold will call this out and save the researcher from his own hubris. Families go bankrupt and entrepreneurs lose it all when such paths are unchecked. Consider former entrepreneur and VC Jeffrey Bussgang’s example (quoted in his excellent book, “Mastering the VC Game”). When his sales pipeline did not turn into contracts, one of his board members pulls out a pen in a board meeting and says, “All I want to know is which of these prospects / companies would you have signed contracts with…by the next board meeting” – that push, writes Jeff, focussed the team. “I don’t think I spent a moment over the next 30 days without wondering how the heck I was going to close those contracts we had promised. Fortunately, we closed them all”  writes Jeff. Now, that’s the value of a good board member – he pushes you without being a pain. And you as the CEO gets the spotlight and the glory.

2)  We are not as rational as we think we are: Hiring decisions, go-to-market and other decisions can often be made by the seat-of-our-pants. After all speed matters so why get into a protracted process interviewing or doing personality tests. Your dorm mate and beer buddy are great “Ruby on rails” ninjas – go get them and throw in a bit of stock options as well. But more often than not, such decisions lead to losses and delays in product development / launch. Its even more painful to fire your beer-buddy – you have never done it before. A good board will help with process, ask the right questions, and develop guidelines. They could bring in a rational approach and slow that bullet train down…. just a wee-bit so there are  no proverbial train-wrecks.

3)  We like to stay in our comfort zone: By far, this is the one challenge which affects individuals more than anything else. You might be able to code but may not be people-persons – or have no idea how to manage a team. People have egos, emotions, dreams and aspirations – machines don’t. Its a lot easier to deal with machines.  On the other hand, a people-Pollyanna entrepreneur could be on off-site treks and kumbaya all day without meeting the key milestones. In either case, we do not like to always grow, learn, and get out of our comfort zone. Staying in the warm pool is easier than getting out in the cold. In such a situation, a board can objectively point out that the team needs to be complemented.

4)  We lie too often and then rationalize it: In his classic book, “The Honest Truth About Dishonesty: How We Lie to Everyone—Especially Ourselves author Dan Ariely narrates a number of fascinating studies to show that “locks are put on doors only to keep honest people honest” – it took a while for us for that statement to sink in. And as bizarre as that may sound, consider his research which shows most of us lie every now and then. We need to save face, look smart or keep the peace. We pretend its fine as long as no one is looking. But a good board member is looking with eyes wide open. And when someone is looking we behave differently. Let your board be your guide and “keep you honest.”

Such can be the immense value of a good board – keep you on track, call you out when you flail, help you and in some cases save you from yourself. Such human behavioral challenges are primal – this is not meant to be critical of our behavior but an educational forum where we try to get better.

Do you know of other such challenges when our hubris exceeds our intelligence?

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